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LOVELY PROFESSIONAL UNIVERSITY

DEPARTMENT OF MANAGEMENT
Unethical Issues Faced by Expatriate Workers in Gulf Cooperation
Council Countries
Business Ethics and Corporate Social Responsibility

Submitted to:
Arshjeet Bajwa

Submitted by:
CHANDAN VERMA
Reg. No. 11301048
Section: RQ2302

Acknowledgement
I hereby declare that the project work entitled Challenges Faced by Expatriate
Workers in Gulf Cooperation Council Countries is an authentic record of my own work
as requirements of class assessment for the award of degree of MBA.

CHANDAN
VERMA

11301048

Introduction
Workers working in a foreign location for more than one year are considered to be
expatriate workers. Expatriates are temporary workers who work in a foreign location
under contracts which are of limited duration. These work contracts may be renewed
multiple times thus prolonging the stay of expatriate worker in a foreign country.
Increasing numbers of expatriate workers are now accompanied by their spouse and/or
children, thus necessitating the need of not only workplace adjustment but also social and
cultural adjustment of self and family. A major section of the work force in GCC is
expatriate population derived from different nationalities. This expatriate work force and
accompanying family members face specific challenges during their stay in foreign land.
Before dwelling into the nature and reasons for such challenges, the following section
first presents an over view of GCC countries.
Common economic Features of Gulf Cooperation Council (GCC) Countries
The Gulf Cooperation Council (GCC) came into existence in 1981, when Bahrain, Qatar,
Saudi Arabia, UAE, Oman and Kuwait joined hands for regional collaboration. The GCC
countries are a part of the Arab world and share a common cultural, religious and
historical background. Some common economic features amongst GCC countries are:
dependence on petroleum products, young and fast paced growth of the local labour
population, and high dependence on expatriates in the private sector. The sparsely
populated region of GCC faces acute shortage of technically and professionally qualified
nationals.
Nationalisation of Workforce in GCC
For many years GCC has been attempting to promote higher participation of local
population in the national workforce with workforce nationalization programs such as
Bahrainization (Bahrain), Emiratization (UAE) and Omanization (Oman). This has been
necessitated by the fact that about 60 per cent of the local population of GCC is between
the ages of 14 and 27 and is speedily adding to the increasing number of employment
seeking adults. In the public sector workforce, higher participation of the local population
has been achieved through lower knowledge and experience requirements for recruits.
Public sector employees are offered better salary, higher job security, lesser work hours,
lesser work content and generous holidays. This creates a privileged workforce segment
of local nationals in public sector with better compensation and less demanding work
profile.
Growth of Expatriate Workforce in GCC Countries
In GCC countries, nationals are a predominant component of government workforce
whereas expatriates are in majority in the private sector. Number of migrant workers in
GCC has increased from just 9 million in 1990 to 13 million in 2005. Popularity of

expatriates in the private sector workforce is due to higher productivity and better
discipline. Poor participation of local population in the private sector has been due to
various reasons such as long and irregular work hours and focus on employee
performance. Private sector organisations depend on expatriates, due to following
economic reasons:

Expatriates are a major source of technically and professionally qualified and


experienced workforce.
Lesser training and induction time as expatriates learn and adapt fast to new
environment.
Expatriates are willing to work longer hours and have lower rates of absenteeism
when compared to that of local workforce.
In comparison to local workforce, the productivity of expatriate workforce is
higher.
Majority of Asian expatriates working in GCC countries are available at lower
salaries when compared to that of local workforce and expatriates from the
advanced western world.
Due to above mentioned reasons government supported programmes for higher
nationalisation of workforce in GCC countries have not delivered desired results
in the private sector. Private sector organisations continue to depend on expatriate
workforce for pure business reasons and will continue to do so in near future as
well.

Gender Differences in Migration in GCC


Though expatriate population in GCC has grown in the last six decades, yet participation
of female in migrating workforce to GCC is one of the least in the world with only 29 per
cent of the migrants being females. A substantial number of Asian female migrants in
GCC are engaged in the occupation of domestic servants. This highlights the fact that
professional expatriate women have limited opportunities in GCC. Orthodox social and
cultural factors are responsible for lack of work opportunities for single women in GCC
as some of the countries do not easily allow work permits for single expatriate females or
married expatriate females not accompanied with spouse. Majority of female expatriate
professionals in GCC are those who have accompanied working spouse or parents to
GCC on a family visa and have later managed a job opportunity.
Gender Differences in Salary in GCC
In the Arab world, women in workplace suffer from bias with reference to severe
differences in pay as well as social attitude towards women in leadership position and the
same applies to GCC. According to Haslberger and Brewster (2008), accompanying
spouses of expatriates find it difficult to find a new job in a foreign location. With specific
reference to female expatriate workers, as many of them originally accompany their
working spouse under spouse sponsored family visa and with no confirmed job, they are
more vulnerable to lower paying jobs. In many circumstances for the same job, with
similar work content and responsibility, female expatriate workers agree to work for a

lower salary in comparison to salary paid to a male colleague, as they prefer to work for
lower salary rather than to sit idle at home.
Social Division of Labour in GCC and Social Interaction between Locals and
Expatriates
While adjusting in an environment of a new country, expatriates face multiple social and
cultural challenges. In the social hierarchy in GCC, local Arabs occupy the highest
platform, followed by skilled westerners, Arabs from other countries and the lowest
position is occupied by the Asians. Within Asians Indians are placed slightly higher than
the Bangladeshis and Sri Lankans. Expatriates from different foreign locations are
extended a different social treatment and Asian expatriates do not enjoy the same social
status as their counterparts from western world do. This social division gets further
enhanced by the fact that local and expatriate populations have lower social and cultural
interaction with each other. Most expatriates in Middle East live in housing compounds
which are located separately from the housing facilities of the locals. The social
interactions of most of the expatriates in GCC with the local population are primarily
limited to professional reasons. An exception to this may be a Muslim expatriate who
may be relatively easily accepted by the local Muslims in GCC countries.
Work Visa Requirements
The majority of migrants in GCC cannot gain citizenship. Expatriates in GCC work on
short term work visa and permanent residency status for the expatriates is discouraged on
account of social and cultural reasons. Work visa are generally issued until the age of 60
years and needs to be renewed after every two years. This creates a sense of uncertainty
and job insecurity in the minds of expatriates as the present labour laws are skewed in
favour of the employer and the work contracts can be terminated any time by the
employer.
Weak Labour Laws in GCC and Labour Market Liberalization
Labour laws in GCC are weak, for example in UAE the labour laws are biased in favour
of employers and the law enforcements is poor. Following facts related to un-skilled and
semi-skilled expatriate workers highlight the poor compliance of existing labour laws by
a large number of employers in GCC countries.

Poor safety condition at workplace.


Forced daytime outdoor work when temperature is very high.
Poor housing conditions.
Delay in payment of salary.
Forced overtime coupled with non-payment for overtime work.
Forced surrender of passport

For an expatriate to change job from one employer to another, while remaining in the
same country in GCC, once required a NOC (no objection certificate) from the current
employer. On account of international pressure on GCC to reform its labour laws, such
practices are being gradually abolished but still more worker friendly labour laws are the
need of hour.
Economic Problems of Expatriates in GCC Countries
According to Haslberger (2008) adjustment of an expatriate in a foreign location is also
influenced by living cost, house rents and other expenses. High inflation in the last few
years has become an important feature of GCC economy. Average inflation in GCC
increased to above 6% in 2007 and further increased to double digit figures in 2008. This
directly influences the capacity of an expatriate to save and remit money to parent
country.

Rising house rents

In GCC, residential rents contribute to inflation in a major way. Residential rents rose in
different GCC nations in the range of 15 to 42 per cent during 2007-2008. In UAE in
2008, 35 per cent of income of an employee was being spent on paying residential rent, in
Oman it was 28 per cent and in Bahrain 26 per cent. Rise in residential rents in most of
the nations in GCC has been attributed to the large inflow of expatriate workers, opening
of real estate markets to foreign buyers and upgrading of housing facilities by the
nationals. Current recession has had some impact on housing rents and the rents have
declined in certain cities and regions such as Dubai (UAE) and Doha (Qatar) but still a
large section of expatriate population has to pay a significant part of their monthly salary
as house rent.

Rising other expenses

Current economic slowdown has not had any impact on cost of living of expatriates in
GCC countries. Most of the cities in GCC are witnessing higher costs of housing,
transportation, food, clothing, household goods and entertainment. A recent survey
conducted in March 2009 by global human resource consulting firm Mercer found Dubai
rising from 52nd rank to 20th rank in the global list of most expensive cities. Other GCC
cities also witnessed rise in ranks in the list of global most expensive cities. Abu Dhabi in

UAE jumped 39 places, from 65th to 26th, Kuwait city rose from 94th to 77th, Manama
in Bahrain rose from 112th to 82nd, Riyadh in Saudi Arabia rose from 119th to 90th rank.

Increasing gap between salary growth and inflation

According to Bayt (2007) research report, the average increase in salary in GCC was 15
per cent but the average increase in cost of living due to inflation and other related factors
was 24 per cent. This rising gap between increase in salary and inflation resulted into
reduced disposable income in the hands of expatriates. Similar findings were stated by
Gulf Talent (2008) report, in which many expatriates reported fall in net disposable
income. For example in UAE, 40 per cent respondents reported lower savings due to
inflation and poor growth in salary.

Salary gap within different expatriate communities

For similar educational qualification, work experience and job responsibilities, expatriates
from western advanced nations are paid higher salary in GCC in comparison to
expatriates from Asian countries. Arabian Business Salary Survey for the year 2009
highlighted the fact that British expatriates working in GCC countries are paid salaries
which amount to more than two times of the salaries paid to their Indian counterparts.
Differences in salary combined with differences in social treatment of expatriates on the
basis of different regions/ countries create two categories of expatriates. First is the
preferred category of expatriates from the western advanced nations and the second is the
general category of Asian expatriates.
News Articles related to unethical issues.
Indian workers beaten by employers in Saudi Arabia
DUBAI: A group of Indians who were lured into a manpower supplying company run by
two Bangladeshis in Saudi Arabia's Eastern Province were beaten up after they
complained about their situation to Indian officials. The group of around 200 workers,
who had arrived in Saudi Arabia two months back, said the two Bangladeshis visited
them at their site on Friday and assaulted them for complaining about their plight to
Indian embassy officials and social workers, the Arab News reported. The workers, both
skilled and unskilled, had shelled out between Rs. 90,000 and Rs. 150,000 to a Mumbaibased recruiting agent, Fahad Enterprises, and are from Delhi, Uttar Pradesh, Bihar,
Rajasthan and Andhra Pradesh. They were promised jobs in the Al-Babtain Plastic
Factory in Dammam, capital of the Eastern Province, but instead ended up in the
manpower supplying company of the two Bangladeshis who forced them to do menial
jobs like cleaners in various locations across the province.
They said that after they complained, a group of five men barged into their
accommodation on Friday and beat up all of them. The attackers also took with them one
of the workers, Himanshu, who used to help aggrieved workers, they alleged. They also
threatened the Indians with dire consequences if they did not report for work.

Some Solutions to Challenges Faced by Expatriates in GCC Countries


Expatriates are in general perceived to be temporary worker, but in GCC a large number
of expatriates have been living for a longer duration. Further, a large number of
expatriates in GCC want to stay back. Above mentioned findings suggest that to large
extent expatriate workers in GCC countries have been able to overcome the hurdles they
face while adjusting in a foreign land. Successful expatriate adjustment in GCC countries
is a joint effort in which the GCC governments, employer and expatriate themselves
participate and jointly attempt to remove the road blocks for expatriate adjustment.
Expatriates do not get to socialise much with the local community and this brings a
bonding amongst the expatriates of similar social status, common regional background,
language, religion or profession. Hundreds of expatriate cultural/ recreational associations
/ clubs are active throughout the GCC thereby providing a platform for the expatriate
community to connect socially. Thus expatriates themselves successfully overcome the
challenge of social isolation. Some GCC countries such as Bahrain and Kuwait are
attempting to address the drawbacks of work visa requirements and are trying to simplify
the procedures in favour of the expatriate workers. Bahrain is in the process of granting
expatriate workers some freedom of movement in the labour market by allowing them to
transfer jobs without paying any penalty. But still more needs to be done by governments
in GCC to legally protect the work related interests of expatriates. Proactive governments
of Bahrain, Kuwait and UAE are in the process of establishing a free labour market and in
near future stronger laws to protect the interests of expatriate workers are expected. But
till then the employers will continue to enjoy the higher bargaining power under the
protection of present labour laws skewed in favour of employers. Thus GCC governments
are attempting to ensure a more liberal and hassle free work visa system for the
expatriates. Gaps between the salaries of expatriates of advanced western nations and
Asian expatriates have narrowed in the recent past with specific reference to Indian
expatriate workers. Indian expatriates are the single largest segment of the GCC
workforce. Economic boom in the early years of the current century has resulted into
growth in salaries in India, and this has put pressure on employers in GCC. They have
two choices, either to stop / reduce recruitments from India or to increase salaries of
Indian expatriates. According to Gulf Talent (2008) survey, Asian expatriates, majority of
who are Indian expatriates, were recipients of highest increase in salary during 20042008. This has resulted into narrowing of salary gap between the Asian expatriates and
Arab/ Western expatriates. But this reduction in salary gap is limited to highly qualified
and technically skilled workers, and majority of Asian expatriates still suffer from the
drawback of bias and gap in salary due to their origin.
Conclusion
Though some of the solutions have been implemented in the recent past to facilitate
expatriate adjustment in GCC countries yet a lot more is still required to be done by the
governments and private sector organisations in GCC countries. To become an attractive
destination for qualified expatriate workforce, governments in GCC countries need to
immediately address following issues: -

Introduction of more stringent labour laws to protect expatriate workers from forced
overtime, poor living conditions, working under hazardous conditions.
Introduction of more stringent laws to protect expatriate workers from arbitrary
increase in house rents.
Simplification of work visa rules to enable an expatriate to freely change employer.
Joint initiatives with the private sector to reduce salary bias against Asian expatriates.
To become an attractive destination for qualified expatriate workforce, governments
in GCC countries also need to further promote participation of female expatriates in
the workforce.
To attract larger number of professionally qualified female workers, following
initiatives by governments of GCC countries are required.
Reduction in gender differences in migration by simplifying work visa rules for
female expatriates.
Better enforcement of labour laws to protect interests of female workers, especially
unskilled and semiskilled female workers.
Joint initiatives with the private sector to provide a work environment where female
expatriate workers do not suffer from any work related bias, especially with reference
to salary bias.
While protecting their cultural heritage and sentiments, governments and private
sector employers in GCC countries need to implement programmes for enhancing
social and cultural interaction between expatriate and local population.
GCC governments also have to continue their efforts in improving the work-visa laws
as well as labour laws to protect the interests of expatriate workers. Governments in
GCC countries in partnership with private sector need to continue the initiatives for a
free labour market and to systematically and gradually introduce stronger labour laws
to protect expatriate workers from possible exploitation by the employer.

Thus, the governments in GCC countries need to play a more effective role in creating a
professional and social environment, which can attract better quality expatriate workers who
can contribute better in the economic development of the region. Introduction of any policy,
programme or law to protect the interests of expatriate workers will produce results only
when the implementation and monitoring of such policy, programme or law is effective and
proper care is taken that such policy, programme or law is adhered to by the employers.
Implementation of labour laws and adherence by local employers is one of the major
weaknesses in work environment of GCC countries.